Regulatory Frameworks of the Construction Sector in Yemen: Legal Framework and Suggested Changes

8/3/2019 Regulatory Frameworks of the Construction Sector in Yemen: Legal Framework and Suggested Changes

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RegulatoryframeworksoftheconstructionsectorinYemen:LegalFrameworkandSuggestedChanges

Dr.MohamedMoghram AssistantProfessorofPublicLaw

FacultyofLaw&Shariah

Sana'aUniversity YemenRepublic

Paperpresentedatconstructionworkshop

28-29September2010Sana’a



Construction industry in Yemen in brief

introduction Construction sector in Yemen considered as an important

sector of the economy and has multiple linkages with other

sectors in the country

It contributes significantly to socio-economic developmentand creates employment opportunities in the country

construction industry in Yemen faces some problems like

many otter less development countries such as :

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introduction in term of institution capacity, many local construction

companies started their construction operations in many

projects, but lacked experienced staff.

most of local firms lack expertise, construction machineryand equipment and construction materials.

Yemeni engineers lack experience in modern construction

techniques

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introduction most of the construction materials are imported because

Yemen does not produce them or produces limited

amounts (e.g. cement).

Yemeni construction lacks domestic machinery orconstruction equipment.

All construction equipment needs to be imported and A

5% custom duty is imposed on these equipments,

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introduction foreign construction companies involved in construction

sector are obliged to pay, unless they are exempted by the

investment law for investment projects.

Yemen does not have a National Construction Database. It is evident from the field that there is no reliable

statistics can be presented with regard to building or

construction performance

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introduction construction sector in Yemen characterized with the

following legal weaknesses:

Construction industry in Yemen is not identified as a

separate Sector. ineffective and fail to effectively implement laws and

regulation.

Administrative regulations of construction sector are

cumbersome

Enforcement of the legislation is still weak and ineffective

lack of clear unified construction standards and regulations

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The assignment of this studythe assignment of the study comprised on the following :

conduct a systematic review and analyses of Yemeni

regulatory and legal framework of the construction sector

in Yemen ; Identify gaps and make recommendations for amendments

to the Yemeni law in light of the international best practices

Review the existing legislative and regulatory framework of

the industry

identify critical constraints/shortcomings affecting its

development

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Methodology of the study

this study used a descriptive and analytical method and

conduct a detailed internal review of the provisions within

the legislation concern with the construction sector in

Yemen. It includes: An extensive review of the existing legislations;

Data collection; examination of this data in light of the

existing Yemeni legislations;

Comparison of the Yemeni context with some best practice

of legal framework of construction industry in the region

and the world.

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Legal and Regulatory Framework of

construction sector in Yemen

legal and regulatory framework of the Yemeni constructionsindustry includes the following laws and regulations:

Procurement law no. 23 of 2007 and its bylaw.

Labor laws no 5 0f 1995 and its amendments

Construction industry codes and regulations including DecreesofthePrimeMinisters(manyregardingprocurementlawimplementation)

Investment law no 22 0f 2002

Republican Decree of Law no. 22 of 1997 concerning

Commercial Companies(the Companies Law) as amended byRepublican Decree no. 15 of 1999, Law no.12 of 2001, Law no. 28of 2004, and Law no. 37 of 2008

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Legal and Regulatory Framework of

construction sector in Yemen

Republican Decree of Law no. 35 of 1991 regarding

corporate entities as amendment by Republican

Decree Law no 7 of 1997

Regulation of classification, black listing ,qualification and licensing of construction

sector. (Decrees of the Prime Ministers )

Financial law

Banking law

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Categories of Construction industry in Yemen

No basis or annual reports on contracts or contractors, small andlarge constructions industries exist

it is difficult to categorize construction industry in a systematicmethod.

Decree of the Prime Ministers No. (419) of 2008 concerningClassification and Registration of the Contractors gives somedefinition and classification of some of construction industry in thearticle 2 of this decree we chose some of them as follows:

Contractor :AnynaturalorartificialpersonwhoshallbepermittedpursuanttoaLicenseissuedbytheMinistryorbytheconcernedofficetoexerciseacontractingprofessioninafieldr

moreofthefieldsthatspecifiedinthisRegulationandaccordingtoconditionsandaccordingtoconditionsandrequirementssetforthinsameregulation.

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Work of the roads: Building, paving and asphalting of the roads,

construction of runways, paving of public squares and side-walks,

construction of bridges and tunnels, supporting walls and box and

pipe culverts including: Installation of steel rails and bars, protecting

barriers, traffic signs, painting works, fixing of guiding and warning

plates.

Buildings works: All works related to industrial, cement and metal

buildings installations and structures, pre-tab light (prefabricated)

buildings works and works related to establishing of garden, parks,

central markets, town and streets landscaping and enclosures, fencesand pavements works as well as other works thereof.

.

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Marine Constructions Works: Works related to sea ports building,ships reparation basins, marine pavements as well as drilling, drivingstanchion in, anchorage cleaning and deepening works as well asmarine barricades and rails, bridges and corniches

Water and Sanitation Works: Works relating to water andsanitation including building of stations for water purification as wellas stations for water treatment and disposal of waste and exertions,installation of sewerage networks and erection of pumping anddrainage stations.

Dams, Water structures and Irrigation Canals Related Works:

Construction of dams, water structures and building of canals andvarious types of irrigation projects (of cement or heavy dust bulk of stone) works of protection from disasters.

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Works of Drilling of Water Wells: Work related to drilling of

artesian wells, water wells as well as various installation and fittings.

Electromechanical Works: All works relating to implementation of

power generation and distribution, installation of networks, lighting

of streets and installing of electrothermal stations as well as

renewable energy and distribution thereof.

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Refrigeration and air conditioning works:- Central system of refrigeration warmness, air conditioning and ventilation.

Mechanical works:- Installation of lifts, mobile ladders, grain silos.Installation of fire extinguishers and safety systems in theestablishments and fixing of conveyor belt, mechanical heatingsystem, installing of turbines, steam boilers, liquid gas filling stationsand others.

Decoration works: - Decoration works of various types of gypsum,wooden and metal buildings. Furnishing of halls, theatres and sizablerooms as well as construction of fountains and swimming pools.

Chapter Two of this decree detailed the scope and fields of the

previous definitions in article 4. Which stated that “Provisions of this regulation are applicable to prime and sub-fields of building andconstruction contracting works as follows:”

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CategoriesofConstruc/on

Legisla/onsinYemen The major construction related laws and regulations in Yemen are

categorized on their application into the following

General Application Laws:

mean most of laws and regulations applied directly to

construction industry which such as: Public Procurement Legislations

consist the procurement law and its bylaw regulation.

labor laws no 5 0f 1995 and its amendments

investment law no. 22 of 2002, and;

Republican Decree of Law no. 35 of 1991 regarding corporateentities as amendment by Republican Decree Law no. 7 of 1997.

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Legisla/onsinYemen Applicabilityofthelawsandregulations:Meansconstructionlawsandregulationthatappliedtocertainentitiesandgovernmental

institutionssuchas: Ministries’headquarters.

Publicestablishmentandauthorities

othercentralbodiesandtheirbranchesthereofatlocalunits,

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Legisla/onsinYemen specializedfundsandotherunitscoveredbythestate’sgeneralbudget.

Administrativeunitsofthelocalauthorities.

Publicsectorunits. Unitswithautonomousordependentbudgets.

CertifiedCreditandGrantAgreements

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Procurement law No. 23 of 2007 on Tender,

Bidding and Government Storehouses

The public procurement system in Yemen is regulated by the

provisions of the procurement law 23 of 2007

This law issued on August 14, 2007.

This new law replaced the former Law No. 3 of 1997 onPublic Procurement.

The new law was aimed among other aims at:

adjusting previous of the Yemeni law on Public Procurement

to the provisions of international standards

enhancing the correctness of the conducted contract award

procedures and modifying the provisions,

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Protectionofpublicfunds,maintainingthestate’spropertyandassetsandfightingcorruptioninbidsandauctions.

Fairnessandequalityintreatmentofbiddersinbidsandauctions.

Integrity,transparencyandaccountability,andstreamlininganddefiningproceduresinbids,procurementsandstorehouses.

Economiceffectivenessinbidandauctionactivities.

Effectivesupervisionandmonitoringofbid,procurementandstorehouseactivitiestosafeguardandprotectpublicfundsand

interest Encouragingcontractors,suppliersandconsultantstodeveloptheirperformanceprofessionallyandeconomically.

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HighTenderBoardisthehighauthoritythatresponsibleforcontrollingandapprovingallbidsthatexceedingtheceilinglimitsdeterminedbytheexecutivebylaw.

Thisboardisconsideredoneoftheagenciescombatingcorruptionthoughitsfocusonthefollowing;

Technicalaspectsofbiddingandtenderinginacompetitiveandfairmannerprotectingpublicfundsandinterest.

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Theboardalsohandlesthecomplaintsreceivedfromthebiddersabouttheproceduresoranyallegedviolations.

TheMinistryofFinance,however,isconsideredtobe

responsiblefortheworkofbiddingsregardingmonetaryissues,

whileMinistryofPublicConstructionsinareasrelatedtocontractsoversights,publicworkestablishmentsfromthetechnicalaspect

MinistryofInternationalCooperationregardingdevelopmentprojectswhicharefundedpartiallyorfullythroughforeignloans

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Gaps on the Procurement system and its Laws and

Regulations mostofitsprovisionsareaboutanadministrativeandcontrolfunction.

Thislawneedstoincorporatethemodernconceptof

theprocurementsystemthatreflectedinastrategicfunctionofthegovernmenttopromotebetterfiscalmanagementandtosupportgovernmentdevelopmentpolicies.

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Regulations Theprocurementsystemisbedeviledbytechnicalandmanagerialdifficultiesarisingfromskillshortages,andasaresult,applicationsoftechnologicaland

managementtechniquestoconstructionprocesses. ChallengesfacedbyContractorsinconstructionsectorinYemenarecenteredmainlyinsomeareasi.e

thebiddingprocess, evaluationandcontractaward, contractformatsandprojectexecution.

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Regulations Despiteampleregulationofprocurement,nospecificregulationgovernsinternationalcompetitivebidding.

Inpractice,foreignfirmsparticipateinnationalcompetitivebidding,theregulationforwhichdoesnotaffordthecustomaryriskmitigationprovisionsthatwouldattractthelowestpricedbidsandpromotecompetition(e.g.exchangeriskprotection,arbitrationfordisputeresolution,appropriatedeliveryterms,etc.).

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Regulations Procurementlaw23of2007allowedthecontractingauthoritiestoawardthecontractsinsituationwhereintheproceduretherewasonlyoneeligibletender

submitted therearesomeinconsistenciesinitsprovisionsarticles91withthestandardsandguidelinesforprocessofbiding,contractawardingandcontractimplementation.

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Regulations Theprequalificationanddesigningbidsprocessrequiresmoretechnicalexpertisewhichinashortatmostofgovernmentministriesandentitiesgoverned

bytheprocurementlawanditsbylaw. TrainingNeedsAssessmentinordertobuildandfostertheirtechnicalskillsthroughplanningongoingtrainingprocess.

Unificationandpopularizationofgoodpracticesconcerningtheawardofpubliccontract,

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Suggestion on the Procurement system and its

Laws and Regulations Fromtheaboveanalysis,somesuggestionsareneedtocorrectweaknessesinpublicprocurementsystemsthrough:

Comprehensivelegalframeworks,withcoordinationoftheregulatoryauthoritiesinaclearpolicyandstrategytopromoteconstructionsectorinYemen.

Effectivemonitoringandauditingproceduresandorganizationstoensurecompliancewithlawsandregulations.

Standardoftermsandconditionsofcontracts. Improvedtransparencyandpublicavailabilityofrulesgoverningtheprocess,and

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Laws and Regulations animprovedcapacityfordevelopingandretainingpeoplewithprofessionalskillsinprocurement

Separatelegislationpertainingtotheselectionofconsultantsfromlegislationpertainingtotheprocurementofgoodsandpublicworks

improvementofcontrolmechanisms,aswellastrainingoftheawardingentitiesandbodiesdealing

withcontrolofcontractawardprocedures

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Laws and Regulations thelegislativeframeworkonpublicprocurementalsoconsistsofthefollowingregulationsthatwereenactedbyregulativeAuthorities(executivebranchas

authorizedbytheconstitution). Thisregulationshadchangedormodifiedmanytimesbycabinetdecrees.

thesechangesdidnotpublishedsuchchangingtheceilinglimitationamountsofbidingatalllevels.

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Laws and Regulations Andalsohasstipulateconditionsnotmentionedinthelawsuchasart9ofthisbylaw.

Oneparticularaspectofthepresentsystemisthatit

treatsequallytheselectionandcontractingofintellectualorprofessionalservices(consultants)andthecontractingofothergeneralservices

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Regula(onnotcompleted TheprocurementlawinYemenpermitsvariousagenciestoissueprocurementregulationsindependently.

Thisgreatlyincreasestheriskofinconsistencies,overlaps,orgaps,andnomechanismisavailabletocoordinatethedevelopmentofprocurementregulationsissuedbyregulatoryagencies

sothatallcanbereconciledandbetteraligned withgovernmentpolicy.

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Regula(onnotcompleted Theprocurementlawstatedinitsarticlesthat:

Mixedsectorunitswhere50%ormoreofthecapitalisownedbytheStateshalllayouttheir

ownrulesandregulationsthatmanagebidandauctionactivities.

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Regula(onnotcompleted Theserulesandregulationsshallnotbeeffectiveuntiltheyhavebeenapprovedbyeachauthorizedentity,andendorsedbytheCabinet

Mixedsectorunitswherelessthan50%ofthecapitalisownedbytheStateshalllayouttheirownrulesandregulationsthatmanagebidandauctionactivities,tobeapprovedandendorsedby

thebodiesconcernedateachunitaspertheirfoundinglaws.

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Regula(onnotcompleted TheMinistryofDefenseshalllayoutrulesandregulationsofitsowntomanagesuppliesandmilitary works.Theserulesandregulationsshallnotbe

effectiveuntiltheyhavebeenapprovedbytheCabinet. TheHighAuthoritymaysupervisebidandauctionactivitiesatthebodiesmentionedinsections(A,BandC)ofthisArticle.

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Regula(onnotcompleted IfthevalueofbidsconductedbythesectorunitsreferredtoinsectionAofthisArticleexceedsthethresholdidentifiedintheregulations,theapprovalofthesebidsshallbewithinthescopeoftheHighTenderCommitteejurisdiction.

TheentitiesreferredtointhisarticleshallimplementtheprovisionsofthisLawanditsExecutiveRegulationsuntiltheentity-specificrulesandconditionshavebeenapproved,providedthattheserulesandregulationsconformtothegoalsandprinciplesofthisLaw.

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Regula/oneffec/ngbids MinisterofFinanceResolutionno1of2010regardingthepreparationanddesignofbids.

Thisresolutionrestrictthebidingprocessbynotallowinganyentitytoenterinbidingbeforeitgetsapprovedfromtheministryoffinancewhichisnottabulatedbythelaw.

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Investment Law no 22 of 2002



InvestmentLawno22of2002

TheInvestmentLawno22of2002,whichisaresultofmanychangesandamendmentsofthefirstlawsince1991consideredacomprehensiveandeffectivepieceof

legislationaimedat: providingadefinitestructure, distinctfrontierand; effectualmanagementtoinvestmentsactivitiesin

Yemen

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Investment Law no 22 of 2002



InvestmentLawno22of2002

ThislawisdesignedtopromoteandregulatetheinvestmentofYemeni,Arabandforeigncapitals.

thelawstatedthatallactivitiesandprojectisgovernedbytheprovisionsoftheinvestmentLawwithinthecontextofthestategeneralpolicy,

goalsandprioritiesofthenationaleconomicandsocialdevelopmentplan,

andnotincontradictionwiththeIslamicjurisdiction ThelawtreatstheArabandforeigninvestoraswellastheYemeniinvestorwithoutanydiscrimination.

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Sectorsarenotaninves(ngsector sectorasnoninvestingsectorandnotbenefitfromguaranteesandbenefitsthatgiventoitsprojectsthesesectorsarethefollowing:

Explorationandextractionofoil,gasandmineralsthataregovernedbyspecialagreements.

Weaponsindustryandexplosivematerials.

Industriesthatharmtheenvironmentandhealth.

4.Banksandexchangebureaus 5.Financialtrade,importing,wholesaleandretailtrade.

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Gaps on the investment law Despitetheallprovisioninthelaw,therearestillsomeproblemsthateffectagoodimplementationofthelawandregulationasindicatedbelow:

Lackofprotectionforpropertyorenforcementofcontracts

lackofdependablejurisprudence,enforceablecontracts,securelandtitles,

Predictabletaxationortariffprotection, insomecasesphysicalinfrastructureandphysicalsecurity.

Lacksofawell-structuredlegalframeworktoensurepropertyrightstoinvestors

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Sugges/on Somesuggestionregardingtheseissuesisimportantsuchas:

Improvingtheconstructioninvestmentenvironment,byreducingthepublicandmixedcorporatecompetitionsasa

presenceofgovernmentinsomeareasofconstructionsector(e.g.,parliamentbuildingmonopolywithoutbiddingandweaknessinotherareas)(e.g.justice,landtenure,bankingregulation,informationandpromotionforpotentialinvestors)

Emphasizeswithintheinvestmentlawsandregulation

additionalnecessaryrulesandregulationsrequiredtocombatcorruptionandpenalizetheofficersofinvestmentauthorityandotherinstitutionsgovernedtheinvestmentissues.

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LaborlawNo.5of1995.andits

amendments labormattersinYemenaregovernedbyprovisionsoflaborlawno5of1995anditsamendments

Thislawappliestoalllaborrelationshipregardlessthesectortheyareworking

foreignersworkingintheRepublicunderaninternationalConventiontowhichtheRepublicisaparty,thisexemptionbeingsubjecttothelimitssetbytheConventioninquestion;

foreignersholdingdiplomaticorspecialpassportswho

haveobtainedavisaandwhoworkintheRepublicsubjecttotheconditionsofsuchpoliticalvisasasmaybeissuedtothem;

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LaborlawNo.5of1995.andits

amendments therearenospecificregulationsapplytoconstructionsectoreveninthelawofprocurement

itsbylawdidnotmentionanyspecificprovisionsfor

theemployeesandemployersrelationshipinconstructionsector

allrelatedissuesoflaboraregovernedbythislawasstatedinthisarticleas“Para.1.

Theprovisionsofthislawshallapplytoallemployersandworkersexceptthosecoveredbyaspecialprovisionofthislaw”

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Laborforceandtraining,investmentlawno22of2002stipulatesthat“projectshallrecruitandtrainthemaximumnumberofYemenispossible,andshall

presentreplacementplanofYemenicadressubstitutingtheforeigncadreswithinappropriateperiodoftimeandaccordingtothenatureofproject

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Occupationalhealthandsafetylaws.(Nospecificlawratherseveralprovisionsinlaborlaw

Therearenospecificlawsandregulationregardingoccupationalhealthandsafety,however,somerulesandprovisionsarefoundinseverallawssuchasarticle105ofprocurementlaw,and

articles113to118andarticles123to127oflaborlawno.5of1995anditsamendments.

Publicsafetyinprocurementlawonlyconcernonthestorageasstatedinarticle105ofprocurementlaw:“Radiant,inflammable,poisonousandexplosivematerialsoranyothermaterialsharmfultotheenvironmentmaynotbestorednearresidential

communities,publicfacilities,orwaterresources. Inallcasesstoragemethodsshouldbeincompliancewithrulesofpublicsafety”

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Sugges/ononinvestmentLaW

Itisimportantforoccupationalhealthandsafetytoberegulatedwithintheprocurementlawandalsoincorporatedintheregistrationandclassification

regulation. Thesuggestionofthisstudyistoconsiderthisasrequirementofregistrationandclassificationofanyconstructionfirmandcompany.

Itisalsosuggestthatgoodrecordsofhealthandsafetyshouldbeoneofbasesforbidingevaluation.

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Republican Decree of Law no. 35 of 1991 regarding corporate

entities and Public Sector Enterprises as amendment by

Republican Decree Law no. 7 of 1997.

BasedontheArticle34,123and124ofLawno.35of1991regardingcorporateentitiesandpublicsectorenterpriseswhichgivesprivilegesandprefeWaiverof

theRequirementtoDemandProvisionofaPerformanceBond

Thewithdrawalfromtheobligationtorequestadepositorasecurityonduecontractperformance.

rencesforthoseentitiesasfollows:

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Republican Decree of Law no. 35 of1991 regarding corporate



RepublicanDecreeofLawno.35of1991 regarding corporate

entities and Public Sector Enterprises as amendment by

Republican Decree Law no. 7 of 1997.

Tookintoconsiderationtheexceptionalcircumstancesinaspecificcasewhererequirementconcerningsecurityondueperformanceofthecontractcouldprecludetheconclusionofacontractorcausethe

significantincreaseoftenderprices. exemptedfromregistrationfeesandsometaxesforitseconomicunits

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Prime Ministers decree No. (419) concerning Classification and

Registration of the Contractors.

And Prime Ministers Decree No. (420) of 2008 concerning Classificationand Registration of firms and engendering consulting companies

TheseregulationsasstatedbyregulationshallbeissuedbytheMinistry/theOfficeinaccordancewiththeprovisionsstipulatedinthisregulationwhichshall

specifyandallowthecontractortoexerciseacertaintypeandlevelofthecontractingworks.

Certificatethatshallbegrantedtonon-Yemenicontractorswhoaredulyclassifiedattheinhomeland

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PrimeMinisterofficedecreeNo:(263)fortheyear2008.Concerning

theBlackList Theprovisionofarticle10ofprocurementlawno.23of2007statedthat“Theentitiessubjecttothislaw,wheninneedofconsultingservices,shallpostanadvertisementinapropermediaoutlettoreceiveinformationfromconsultantswillingtooffertheadvertisedconsultingservices.

TheExecutiveRegulationsdetailtherequiredprocedures”. Despitethisprovision,nooneofthecontractorshasbeencaughtinviolationofthisarticle;eventheseviolationsexistinpractice.

Article100fprocurementlawno.23of2007

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Sugges/on

RevampandEnforceBlacklistingRegulation Theconstructionsectorarefacedmanyproblemthatneedtobesolvedthroughrevampingandenforcingblacklisting.

thereismuchprovisionstopunishcorruptofficials,butnotenoughtopunishcorruptingfirms.

Theprosecutionofthecriminaloffenceisdifficultandtimeconsuming,andhence,noteffective.

Thegovernmenthaseveryrighttodealonlywithethicalfirms.Businesscommunityshouldberequiredtoadheretoa“codeofconduct”iftheywishtodealwithpublicpurchasers.

Anyinfringementshallresultinsanctions. Theblacklistingrulesneedimprovementspermittingexclusionfrompubliccontractsforaperiod,orpermanently,dependingontheseriousnessoftheoffence.

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Companies’law TheCompaniesLawhasbeenissued.

Thislawrequirementsintermsofshareholders,directors,minimumcapitallevelsandincorporation

procedures. Thelawsetsforthprovisionsgoverningconversion,mergeranddissolutionofcompanies.

itsmostrelevantprovisionspertainstothecondition

statingthatatotallocalequityofnotlessthan(51%)mustbecompliedwithinanycommercialcompany, whileremaining49%maybelongtoforeigners.

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Sugges/on Registrationoffirmsandcompanydoesnothelpmuchontheissueofprocurementthereforeitisimportanttohavethefollowingsuggestion:

TheregistrationsystemshouldserveitspurposerelatedtopublicprocurementandcurrentlyfunctionstothedisadvantageofmanycapableYemenibidders.

Leavestheproblemofpre-andpostqualificationofunregisteredforeigncontractorsunresolved

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Construction building law no.22of 1995and it bylaw

no.448 of 2008

BuildingRegulationsareconcernedwiththeadequacyofbuildingconstruction.

theseonlyspecifyminimumconstruction

performancewithinalimitedframeworkofhealthandsafetyobjectives.

Theconstructionindustrysuffersfromaninadequateregulatoryframework,theabsenceofconstructionnorms,andthelackofaqualifiedworkforce.

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Sugges/on RationalizeandIncreasetheEffectivenessofYemeniBuildingRegulationsastheprimarylegalinstrumentinYemenforsettingbuildingperformancestandards.

EnsurethattheinterpretationandoperationoftheBuildingRegulationsisuniform,harmonizedandcompetentacrossthecountry

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The Financial Law no. (8) of 1990 which amended by

Law no.(50) of 1999” and bylaw of the financial law Asstatedbyarticle2ofthefinanciallaw,itapplytoallministries,government

authoritiesandbodiesanddifferentorgansandbranchescontainedbythepublicbudgetofthestateincludingalladministrativeunitsandlocalcouncilscoveredbythegovernoratesbudgets.

Thesameprovisionsapplytoalleconomicunitsofthepublicandmixedsectorsandunitsofindependentandannexedbudgetsunlessthe

incorporationlawsstipulatethecontrary. Theprovisionsofthislawapplyalsotowhereverthereisnospecialprovision

appliedtothosebodieswhichincorporationlawsincludespecialrules,provisionsandregulations.

ARTICLE(74)offinanciallawstatedthat“Theestablishment,amendmentandcancelingofpublictaxescouldnotbemadeonlybylawandnobodyisexemptedfromtheirtotalorpartialpaymentexceptincasesstatedbylaw.Itmaybeimpossibletochargeanybodytopayanytaxes,leviesandpublic

chargesexceptbylaw”isviolatedbyimposingfeesforcityimprovementwhichreachesoneYemeniReyaloneachcementbag50Kgenteredthecity.

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Sugges/on

Thislawneedtorevisedandamendedinthecontentofrevenueandprocurementissues

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taxa/onlaw

TheIncomeTaxLawandrelatedregulations(Article13)require“profitsorlosses,auditedbyacharteredaccountant…accompaniedbycopiesofthefinal

accounts,balancesheet, thedepreciationstatementpreparedbythetaxpayer,andastatementoftheaccountingprinciplesupon whichallthefiguresshowninthedeclarationarebased.”

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taxa/onlaw

MinisterofFinanceResolutionno.255of1999,Article4,addsarequirementfor“explanatorynotes”.

ProjectsregisteredbyInvestmentAuthorityare

subjecttocustomsexemptionsasstatedbyinvestmentlaw22of2002.

Thelawstipulatedthat“customsexemptionsprovidedforinArticles(16),(18)and(19)ofthisLaw,shallbedeemedtoberelatingtoprojectsregisteredbythe Authority.

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bankinglaw TheCentralBankofYemenhasprimaryregulatoryauthorityoverbanks,inadditiontoitsvariousotherrolesingovernmentandpublicfinance.

ItisthesinglemosteffectiveindependentregulatorybodyinYemen,withfairlystrongregulatoryandmonitoringpowers.

TheBank’smainweaknessissimilartootherinstitutionsinthatitlacksstrongtoolsforenforcing

regulationsandforcingviolatorsintoline. Inadditiontotheaboverules,banksaresubjecttoadditionalCentralBankrules:

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bankinglaw Facilitiesgrantedtorelatepartiesmustbegrantedonsubstantiallythesametermsasthosegrantedtosimilarthirdpartycustomers;

Totalcreditfacilitiesgrantedtoanyemployeemaynotexceedoneyear’sgrosscompensation;

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bankinglaw Totalcreditfacilitiesgrantedtoanynon-employeeBoardmembermaynotexceed0.5%(one-halfpercent)ofthebank’stotalcapitalplusreserves;

Totalcreditfacilitiesgrantedtoanyshareholderowning5%ormoreofthecapitalislimitedto15%ofthebank’stotalcapitalplusreserves;

Totalfacilitiesgrantedtoallrelatedpartiesinaggregatemustnotexceedthebank’stotalcapitalplusreserves;

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bankinglaw Relatedpartyloansmaynotbewrittenoffwithoutacourtdecreeofbankruptcy,unanimousapprovaloftheGeneral Assembly,CentralBankapproval,andthewrite-offwillnotbetaxdeductibleasaloss;

.However,intermofbankinglawsandregulationconcerningtheconstructionsector:

Thereisnobankorfinancialinstitutionthatspecializesinconstructionfinance.

Thereisalsoalackoftechnicalexpertiseinfinancialservicesthatcatertoconstructiondevelopment.

Infrastructuralweaknessespertainingtotheconstructionsectorcontributetotheproblem.

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bankinglaw Localconstructionsareburdenedbythelackofavailabilityofloansandotherfinancialservicestomostconstructionsector.

Constructiondisputelinkedtotheseproblemsledtothegapsinconstructionsector.

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Sugges/on

Reformingthefinancialsectorisessentialifthebankingsystemistoplayitsroleinmobilizingandefficientlyallocatingresources

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Construc/onRegulatory

Authori/es legislationsoftheconstructionindustryareissuedbythelegislatureauthority.

thepolicies,procedures,guidelinesanddelegationofauthorityrelatingtoconstructionindustryinYemenareissuedbytheexecutivebranchofthegovernmentthrough:

cabinetministers,

MinistryofPublicWorksandhighways,

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Construc/onRegulatory

Authori/es TheHighAuthorityfortheControlofTendersand Auctions,

TheHighTenderCommittee,

MinistryofFinance,and alsothroughotherministries.

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Weaknessesintheconstruc/on

system ThechallengesbeingfacedbytheconstructionsectorinYemenincludeinsufficienteducationandtraining(lackofHR).

Absenceofcommitmentfromthegovernmentauthorityespeciallyincontractenforcement.

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system Lackoflong-termvisionandplanningforthesector

ineffectivebudgetaryproceduresresultingincostover-runs,

Fluctuationsinworkload,defectivecontractdocuments,corruptcontractingprocedures.

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system Lackofprotectionagainstadversephysicalconditions. Paymentrelateddelays,problemsofbondingandinsurance.

Lackofadequatefinancialresources,uninstabilityofforeignexchange.

Unfaircompetitionfromstate-ownedcontractorsandconsultants

Non-availabilityofequipmentandmiscommunicationofinformation.

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Absentofcoordinatedagency Thereisaneedtoestablishasinglecoordinatedagencyandsimultaneouslysupportotherpublicpolicies

suchasdevelopmentofconstructionandsocialgoals, withoutcompromisingthemainobjectivesofeconomy,

efficiency,transparencyandaccountabilitydepartmentoragencytoevolve,

coordinateandoverseepoliciesandproceduresinconstructionindustry.

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Competence,SkillsandTrainingofOfficersand

Staff

MostofthelawsandregulationreviewedinthisstudyapprovedthatthereisnoCompetence,skillsandtrainingofofficersandstaff,

becausetheconstructionindustryinYemenisyettodeveloptomaturity.

Exceptforafewlargefirms,themajoritiesarelaborcontractors,withoutadequatefinance,equipmentorprofessionalstaffandaremainlydependentongovernment

contracts. Thegovernment’spolicies,thetenderingandcontractingprocedures,anddocumentsaremostlyresponsibleforthis.

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Competence,SkillsandTrainingofOfficersand

Staff

Contractorshavebeentreatedasmerelaborproviders, withthegovernmentassumingresponsibilityfordesign,provisionofmaterialsandtechnical

supervision, andevenpreparationofclaimbillsonbehalfofthecontractor.

Also,foralongtime,thegovernmenthastendedtoprotectlocalcontractorsfromforeigncompetitionbypackaginglargecontractsinsmallpackages,whichhasconstrainedtheirgrowth.

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Sugges/on

Theindustryneedsachangeofenvironmentinordertogrowtomaturity.

Forthebulkofsmallercontractors,thegovernmentshouldpromotetraininginallaspectsoftheconstructionandexposethemtomodernandinternationalpracticesanddocuments.

Suchtrainingprogramsshouldcovercosting,riskassessment,differenttypesofcontracts,preparationofbids,logistics,constructioninsurance,contractandclaimsmanagement,qualityenhancement,disputeresolution,etc.

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Sugges/on

Thegovernmentshouldalsopromotecreationofequipmentleasingcompaniesandexpansionofproject/constructioninsurance.

Inalltheseinitiatives,thegovernmentshouldworktogetherwithexistinginstitutionsinthepublicandprivatesectors.

Asforthelargercontractors,thegovernmentshouldpromotejointventureswithmoreexperiencedforeignfirmsbysuitablepackagingoflargecontracts,

sothatlocalfirmsacquirelogistics,contractmanagementandotherskillsfromsuchassociation.

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Sugges/onsforchanges ThestudyprovidedsomesuggestionsrelatedtolegalandregulatorysysteminYementhathelpstoimprovesuchsystem.

Tocorrectweaknessesinpublicprocurementsystemsthrough:

♦Comprehensivelegalframeworks,

♦Effectivemonitoringandauditingproceduresand

organizationstoensurecompliancewiththeregulations,

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Sugges/onsforchanges ♦Standardtermsandconditionsofcontracts,

♦improvedtransparencyandpublicavailabilityofrulesgoverningtheprocess,and

♦improvedcapacityfordevelopingandretainingpeoplewithprofessionalskillsinprocurement

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Conclusionsand



Recommenda/ons

1. Conclusions Legislationcanhaveagreateffectonthepolicy,planning,andthequalityofservicesandmanagement

ofconstructionsectorinYemen.Itisessentialthatlawsandregulationcan:

Expressthepolicyofthegovernment

Definethescopeandfunctionsofdifferentcategoriesofconstructionsector

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Conclusionsand



Recommenda/ons

Regulatetherequirementsforpracticeofconstructionprojectsandtheworkingcondition,andprovideguidanceandstandersthatneedtobefollowed.

Regulatethedistributionofresponsibilityofvariousgoverningauthoritiesofconstructionsector.

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Conclusionsand

Recommenda/ons2. Recommendation Developmentoftheconstructionsectorrequiresalong-termcommitmentfromthegovernmentinterm

andpolicesandLawsRelatedtotheConstructionSector

LawgoverningUrbanPlanningandBuildingin Yemen.ThislawwillconstitutethebuildingcodesaimedatorganizingandregulatingthefieldsofurbanplanningandbuildinginYemen.

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Conclusionsand

Recommenda/ons TheBuildingControlRegulations StandardsandSpecificationsfortheConstructionIndustry.

AHealthyConstructionIndustryrequiresadequatenumbersofprofessionals,semiprofessionalsandartisanstoeffectivelyexecuteconstructionandmaintenancework

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Conclusionsand

Recommenda/ons Thefollowinglawsshouldbesubjectedtoscrutinizingstudyinordertoamendthemandharmonizethemilluminatinganycontradictions:

RepublicanDecreeofLawno.35of1991regardingcorporateentitiesasamendmentbyRepublicanDecreeLawno7of1997

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Conclusionsand

Recommenda/ons Regulationofclassification,qualificationandlicensingofconstructionsector.

Financiallaw,intermofprocurementsystemand

revenuescollection. Bankinglawtotakeinconsiderationtheconstructionandsmallenterprisessector.

Laborlawsno50f1995anditsamendments.

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Conclusionsand

Recommenda/ons Thefollowinglawsshouldbeissuedandpromulgated:

EstablishingtheConstructionOccupationslicensingframeworkisaneffectivemeansofregulatingtheconstructionindustryandensuringanefficientframeworkforskillsrecognitionwhichiscompatible withthenationalframework.

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Conclusionsand

Recommenda/ons Promotingthedevelopmentofthebuildingconstructionsectorthrough:

Promotingthedevelopmentofthebuilding

constructionsectorbyofferingincentivestosmallcontractors,andprovidingfacilitationintechnologybasedtrainingprogrammes;

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Conclusionsand

Recommenda/ons PromotingthedevelopmentofTechnicalandVocationskillstoenhancethehumanresourcecapacitiesinskilledandsemi-skilledcategoriesoftheconstructionsector

Ensuringtheadherencetodevelopedstandardsforbuildingmaterials,andconstructionmethodsandtechniques.

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Thank You!!! And

Now open my selfe for your questions and comments it is

your chance..............

Documents

Regulatory Frameworks of the Construction Sector in Yemen: Legal Framework and Suggested Changes